Good faith deposit for co-ops?
I’m a first time buyer. Was making an offer on a Brooklyn co-op, and seller’s agent said I needed to put a good faith deposit in the form of a cashier’s check. Amount was less than 1% of offer, but since I wasn’t familiar with the term, I was nervous and asked around. People I…
I’m a first time buyer. Was making an offer on a Brooklyn co-op, and seller’s agent said I needed to put a good faith deposit in the form of a cashier’s check. Amount was less than 1% of offer, but since I wasn’t familiar with the term, I was nervous and asked around. People I asked (including 2 co-op owners, 2 other real estate agents, and a mortgage broker) said they had never heard it practiced for co-ops in NYC, only for houses.
When I explained my hesitation to the seller’s agent and broker, all I got in reassurance was their word that this was a common practice in real estate. When I insisted for a referral (for people who could give me add’l info or experience on these kinds of deposits), I was given one eventually but told I was being insulting for asking and listening to the wrong people.
Did I listen to the wrong people? Was I wrong to ask for referral? Would appreciate any advice from people with experience with co-ops and good faith deposits. Thanks!
Name the bastards. Or at least drop some strong hints. Let’s out them.
Who was the broker?
We’d like to know who to avoid.
broker doesnt make sense…if the seller accepted the check and cashed it…it would prevent a higher offer. If the broker accepts it…well who’s to say it wasnt a finders fee?
Thanks again for everyone’s comments. The deal fell through and I think it was probably for the best.
The broker was asking for the check to be made out to his realty company, to be returned to me after the closing.
The way it was explained to me, in theory the deposit would prevent the seller from accepting a higher bid… but if the seller “did not go through with the sale”, aside from giving me back my deposit, there seemed to be no other penalty. However, I would forfeit the deposit if I “did not go through with the sale”.
Did some more checking and there is no set rule and it is not unusual, but you only do it when you are entering into contract to purchase- it is a security deposit of sorts for the seller.
Pretty much everyone says to handle it through a third party such as escrow or your attorney, do not give good faith money to a broker or a seller directly. Depending on the contract the money could return to the buyer or transfer to the mortgage down payment upon closing.
When I bought my house in 2000 there was no talk of good faith deposit.
we just bought a co-op and were never asked to do this. we were also first time buyers and in retrospect i feel the brokers totally played on our insecurity and naivete. hold strong and good luck
dont do it, deposits are made to the attorney’s seller and put into escrow. Who does the agent want the check made out to?
either they accept your offer or dont. Dont play their games
Be wary of anyone who tells you its wrong to care about your money.
Would a good faith deposit prevent the seller from accepting a higher offer before you go to contract?